Call to make insurers tell you how much more you'll pay to renew as research shows drivers save £76 by shopping around

Simple changes to insurance renewals would help make policies easier to understand and help customers get a better deal, according to the Association of British Insurers.

The industry body has written to the Financial Conduct Authority to propose changes to renewals. This includes printing the previous years’ price alongside the new quote for greater transparency and easier comparison.

It comes as a survey of nearly 3,000 people by the ABI found 89 per cent would find this move beneficial.

Renewal woe: Those who automatically renew usually end up forking out far more than they need to

Separate research
by comparison website Comparethemarket.com today found the average price
motorists can save by shopping around for insurance, rather than
renewing automatically, is £76.

Additionally,
the average cost to all drivers of renewing motor policies without
looking elsewhere is estimated to be £2.74billion.

At the same time, it found car insurance premiums have fallen across all age brackets in the last 12 months, with costs dropping by three per cent since the first quarter of 2013.

The FCA has already started looking into the area of renewals and is currently working with insurers to make changes.

The ABI believes policy documents for new customers should include a clear explanation of any introductory discounts, which may then not apply when the cover is due for renewal.

Huw Evans, deputy director general of the ABI, said: ‘Insurers want to make renewing your insurance policy easier and clearer to understand by reminding you of last year’s premium and flagging up introductory discounts.

‘Most of us have home or car insurance and it is important we have the information we need when it comes to renewal.

‘Our proposal, if adopted by the FCA across the market, would significantly improve transparency for millions of customers. We look forward to discussing it in detail with the FCA.’

The ABI wants the plan to come to fruition by the end of next year.

An FCA spokeswoman said: ‘We welcome the ABI’s contribution to the debate on helping consumers make better decisions at renewal time. We already have various pieces of work underway in this area and will continue to work with the industry as this develops.

‘We will report back on our work in 2015 but we would encourage firms to develop innovative solutions that will benefit consumers in the meantime.’

Richard Lloyd, executive director of Which?, said: ‘The ABI’s proposed reforms would be a victory for the 30,000 people who signed our campaign calling on insurers to show customers the premium they paid last year.

‘These simple changes could save people money by prompting them to shop around or haggle for a discount, and we urge the FCA to adopt the proposals.’

Selwyn
Fernandes, managing director of LV= Direct, supports the idea. He said: 'There needs to be an industry
standard on how information is presented to consumers in order for them
to be able to compare renewal premiums easily.'